The stock market has been on an upward streak for the past two years, and the Dow and S&P have returned to hitting all-time highs, despite the precarious outlook for equities laid out in this week's earlier report: The Stock Market's Shaky Foundation.
At the same time, unrest in an increasing number of markets around the world (Venezuela, the Ukraine, Turkey, Argentina, to name just a few) threatens contagion risk. And looking at the big picture, interest rates remain elevated from their 2012 lows and are likely to move higher, not lower, from here.
For these (and other) reasons, the current environment is extremely challenging for investors. The pick-a-sector-and-then-buy-and-hold strategy that has worked well for many of the past several decades is no longer prudent. Investing in today's markets requires more fundamental analysis at the individual company level, as well as a willingness to defensively build up "dry powder" reserves to deploy if indeed (as we expect) a major downward market correction brings assets prices down to much lower levels.
In this week's podcast, Chris talks with the team at New Harbor Financial about the current outlook for the market and what they think investors should be prioritizing:
Maintaining discipline and patience here, is very, very important whether you are a money manager or an individual investor. It is times like this that it is really truly the hardest thing to do—to sit out, to remain in cash to a large degree, to watch others brag about the easy gains that are being made—when the data set that you are looking at is telling you to be extremely cautious, as it has been telling us for some time. Human behavior never changes. We are seeing—amongst not just our clients but people that we talk to—we are seeing a lot of frustration. Not necessarily frustration with either how they are managing their money or how we are managing their money. They just feel frustrated that they cannot, in a safe way, take part in more of the gains that they perceive others are taking.
So you know, the sense is that everyone is partying except them, and that can be very mentally distracting. I think a lot of your listeners out there that are managing money for themselves are battling this.
So the prevailing sentiment out there for people that are in the stock market that have made good gains in the last year or so, even if it has been a risky environment that whole time, is that they can get out whenever they want to. And history has shown that it is often difficult to do that. If you look at the nature of the market, it went literally almost straight up last year. And we are seeing a little bit of a change in character early this year, a little more volatility. We had about a 6% drop about a month ago, a few weeks ago, January. We came right back to the highs. And it is the self-reinforcing behavior in the market that when people go in and buy dips, it keeps coming right back and that is—eventually when a bear market develops, that is what causes so much damage because people have been lulled into complacency and they think, "well, I have been buying each and every drop, I will just buy each and every drop all the way down," until, of course, they do not want to look at their statement to their accounts anymore and then a bottom forms some years later.
But right now in the community, we are seeing more pressure psychologically, really, than I think we have ever seen in our business. Certainly more so than in the 2007/2008 timeframe. So most of our job these days is essentially counseling people to remain patient and not get tempted into these risk markets. The job of this bull market is to shake every bear off and to suck every last bull in. And the data set just does not support that.
The discussion then continues, focusing on risk management strategies investors can consider such as raising cash, taking advantage of stable value funds (if your retirement plan offers them), taking short-term high-quality bond positions, deploying options such as covered calls and puts (but be sure to do so under the direction of your a professional financial adviser if you don't have prior experience with options), and others.
But perhaps even more important, the New Harbor team advises investing in grounding yourself emotionally. Focus on the data and don't let emotion cloud your decision-making. Decide on a plan that makes rational sense to you, and stay disciplined in carrying it out over time – no matter what temptations or taunts the market, or your neighbors, may serve up in the short term.
If after listening to this podcast, you find yourself interested in connecting with Mike, John, and the rest of their team to learn more about their advisory services, please use the form here to do so.
Transparency note: As a result of our public endorsement, Peak Prosperity has a commercial relationship with this firm. The details of this relationship are clearly presented in writing during the referral process — but the punchline is, our relationship does NOT result in any increased fees to those who become clients.
It should go without saying: this discussion should not be construed as individual financial advice by those listening to it. The content should be taken as informational and educational in nature only. Investment advice must be tailored to your specific personal situation (which Chris and his guests are obviously unaware of) and should be obtained directly from a financial adviser you trust. Before acting on any of the statements made in this podcast, we advise you do just that.
Click the play button below to listen to Chris' interview with New Harbor Financial (30m:14s):
Chris Martenson: Welcome to this Peak Prosperity podcast. I am your host, of course, Chris Martenson. And today, we are going to be discussing risk mitigation strategies in these crazy market times. You know, the stock market is powering to all-time new highs and yet, there is fundamental data that suggests that might not be the wisest thing. People have been in the market, out of the market, we are watching retail money flows scoot back and forth as bonds started to sell off recently, there were record outflows from bond funds. People are moving their money hither, to and fro, and the question is: How does one maintain safety and the sanctity of their sanity and their portfolio’s gains in this particular market environment?
So today, to talk with us about that are our friends at New Harbor Financial. We have got Mike Preston and John Llodra today. Mike, John, welcome to the show.
Mike Preston: Hi, Chris, thank you.
John Llodra: Hello, Chris, and hello, listeners. Nice to be here, thanks.
Chris Martenson: Excellent. So where do we start in this? Let’s talk about where we are in this market and why it is necessary to have risk mitigation strategies. Maybe we should start with what that even means. Who wants to start?
John Llodra: Sure, I will kick us off here, Chris. This is John. You know, here we are in 2014. It is really nice for us here to think about new years, new calendar years and think about changes and new perspectives. You know, from an investment standpoint, the change of a calendar year is really nothing more than psychological. It is an arbitrary day of 365 in a given year, and I think it is important to understand, while we are in a new year, we still have to be cognizant of the environment we are in and where we have been for, we would say, better than a year. Last year, we saw some remarkable, if not against-all-odds, kind of performance in at least some markets. But it is important to realize that the change of a calendar year does not change the reality of what was in place.
You know, the way we see it—and have seen it for some time—is that we are in a pretty rare environment in terms of risk. You kind of think along three broad lines as to defining a pretty extraordinary risk environment. On the one hand, you have valuations and—let’s talk about the stock market—the valuations, how much stocks are trading for, the price that stocks are trading for is the multiple of the earnings of stocks—is at levels that have rarely been seen in history. And the times where we have been at these levels have categorically been risky times to be invested in the stock market.
Add on top of that, you know, rampant degrees of speculation. You know, folks putting caution to the wind and speculating just because it, at least, has been working out. The jury is always out as to whether that will continue to work out. And we still have near-record amounts of margin debt as one sign of rampant speculation.
And then sentiment. You know, sentiment, just broadly, you know, people’s bullish or bearish tendencies and you know, we recently registered record levels of bullish sentiment on the part of investment managers and very few lonely bears out there. In other words, everybody has been on the same side of the boat, which—these things together have largely explained why the stock market had such a strong up year last year, even despite the risky environment.
So the change in the calendar year really has not changed any of those things. So you know, now more than ever, we think exercising and preaching caution is very important and we would be happy to articulate some of the specifics about what we mean by risk management and addressing those risks.
Chris Martenson: Well, excellent. So John, where do we put something like Facebook buying WhatsApp for $19 billion and/or Tesla trading for, I guess, near the market cap of General Motors at this point? Do you toss that down under speculation or is that just a marker of sentiment at this point?
John Llodra: You almost have to talk about each of those separately but they are kind of the same thing. Buy first, ask questions later is kind of the sentiment that is going on right now—you know, Facebook buying WhatsApp, I mean, you almost could change the calendar year to 1999 and have thirty different stories that look just like that. You know, there have not been very many tough questions on the part of investors as to why that was a good move and what does it mean for me as a shareholder and why it is going to be good for me. Yet, you know, folks seem to want to be in that stock with reckless abandon.
Tesla, I am actually a big fan of the paradigm shift there, but I do not think the speed and trajectory of the ramp-up in that stock can be justified, even if in the longer term it proves to be a much bigger market share than it already has. The simple theme there is that markets, in general, and when you look at individual stocks like that, have ramped up without much of a breather at all. And that is just not normal. A healthy market, even one that trades much higher over time, does have pauses as investors digest and rationalize the moves higher. And that always comes in the form of pauses or relief, you know, or moves to the downside even if the longer trend is higher.
So yeah, those are just two headline examples of investors from very sophisticated institutional managers to do-it-yourselfers at home, you know, kind of putting these objective risk signals on the sideline and jumping in and asking questions later, you know? That is very much our view on the reality of the markets certainly now and for much of last year.
Chris Martenson: Well, certainly, I'd consider those two examples of throwing caution to the wind, which of course, makes me more cautious, because we have seen that story before, right? So I do not know where you were starting to categorize those particular moves—not to pick on those two, in particular, I have got a dozen others that we could talk about, but that is for another podcast and another day.
Mike, I am interested—you guys are frontline, obviously. Now, you have got clients that you work with on a daily basis, you are in the markets on a daily basis. And at times like this, prudence is, of course, exceptionally important, but man, it is hard to do. How are you—what is going on with you as you are trying to negotiate this world of investing at this point in time?
Mike Preston: Well, maintaining discipline and patience here, Chris, is very, very important whether you are a money manager or an individual investor. It is times like this that it is really truly the hardest thing to do—to sit out, to remain in cash to a large degree, to watch others brag about the easy gains that are being made—when the data set that you are looking at is telling you to be extremely cautious, as it has been telling us for some time. Human behavior never changes. We are seeing—amongst not just our clients but people that we talk to—we are seeing a lot of frustration. Not necessarily frustration with either how they are managing their money or how we are managing their money. They just feel frustrated that they cannot, in a safe way, take part in more of the gains that they perceive others are taking.
So you know, the sense is that everyone is partying except them, and that can be very mentally [break in sound] we are dealing with now as money managers. And I think a lot of your listeners out there that are managing money for themselves are also battling this.
So the prevailing sentiment out there for people that are in the stock market that have made good gains in the last year or so, even if it has been a risky environment that whole time, is that they can get out whenever they want to. And history has shown that it is often difficult to do that. If you look at the nature of the market, it was really literally almost straight up last year. And we are seeing a little bit of a change in character early this year, a little more volatility. We had about a 6% drop about a month ago, a few weeks ago, January. We came right back to the highs. And it is the self-reinforcing behavior in the market that when people go in and buy dips, it keeps coming right back and that is—eventually when a bear market develops, that is what causes so much damage because people have been lulled into complacency and they think, "well, I have been buying each and every drop, I will just buy each and every drop all the way down," until, of course, they do not want to look at their statement to their accounts anymore and then a bottom forms some years later.
But right now in the community, we are seeing more pressure psychologically, really, than I think we have ever seen in our business. Certainly more so than in the 2007/2008 timeframe. So most of our job these days is essentially counseling people to remain patient and not get tempted into these risk markets. The job of this bull market is to shake every bear off and to suck every last bull in, and the data set just does not support that. And so we are doing our best to make sure that people maintain disciplined and safe.
Chris Martenson: Well, that is excellent. Because a couple of things have been missing from this big run up and one of them is volume and the second has been retail participation. And there is a disturbing trend historically that tops are made when, finally, the dumb money is distributed, to use a term that Wall Street likes to throw around—kind of like "Muppet" only different. And so the idea here is that tops are made when the final distribution is made from those who have something to sell to people who want to buy it at any price.
And so yeah, the market structure has been changing a little bit. 2014 started out a little bit differently than the prior year had gone. Obviously, we have had a recent run up again and so we are sort of hovering at those all time highs. But let’s talk about—how does somebody really have risk control in this environment? What sort of things are on your checklist as you are thinking about how you are going to help people protect their capital?
John Llodra: Yeah, so you know, the first thing we would like to say, it is not a black and white kind of thing. It really comes down to matters of degree, and extreme times call for extreme degrees and vice versa. So, where we are right now, investors need to ask themselves, could they ever imagine a time, if they knew with some high degree of confidence—or had a high degree of confidence that there was a fairly large pullback in the market happening -- if they had that confidence, would they be willing to scale back their stock exposure? That is really what it comes back down to. And if folks could find that within themselves—we cannot think of a better time to think about doing that in, probably, a dramatic way for those who are or have been heavily invested in stocks and benefited from the significant rally last year and the years preceding that.
You know, the right amount to be in a stock, it is kind of an art more than a science and we, as investor advisors, certainly like to talk about this with our clients and share with them our perspective as it relates to our understanding of their needs what we feel the right amount of exposure is. But you know, it is not obscene to think about something as low as 15% or 20% in stocks. As off kilter as that might seem to a Wall Street firm, we think some times call for that and we cannot think of a better time right now where that may be an appropriate allocation for someone who is concerned about capital preservation.
Even at that, one can talk about hedging strategies that we can get into a little detail a little bit later on how to kind of have some stock exposure but still put some defined parameters as to what kind of risk one is willing to bear with that stock exposure.
We also talk about other asset classes. Cash is a very appropriate asset class, though it is not paying much in the way of yield right now, thank you to the monetary policies of the Federal Reserve and their peers across the world. But you know, cash does have a benefit of keeping powder dry so that you can do the buying low, as the saying goes, when prices present at more attractive levels. And sometimes you cannot have enough cash if the move downward is large and swift enough, and that is obviously only something you will know in hindsight, but darn, cash feels pretty good to have when those kinds of resets happen.
We do believe some exposure to precious metals and commodities is sensible in appropriate allocations. One divergence, if you will, from last year is that some of the most revolved[R1] assets, as Mike alluded to earlier, have actually seen some reprieve this year. You know, previous metals, and particularly gold mining stocks, are amongst the strongest performers this year and, in fact, the strongest sector in the stock market, even though they were the worst beaten down sector last year. Some people might wonder what has changed, what happened to make that the case. Nothing really changed other than psychology—the fundamentals that underlie that sector really have not changed all that much. It is just simply that people got tired out of selling out of panic last year and there has been a bit of a buying back into that sector this year. And that alone can cause a dramatic shift, you know. So far, year to date, precious metal mining sector is up about 25% for no other good reason than the psychology changed and the buying and selling dynamics changed rather abruptly right around the change of the calendar year.
Mike Preston: This is Mike, Chris. I think I would like to just kind of repeat a little bit of what John has been talking about because I think it is important. If you are in a market that is really very, very risky, or at least shows a data set, or a number of indicators that would cause great concern—and again, just a recap, that is very high valuation, you know, Shiller price earnings ratio above 25, lots of speculation, and New York Stock Exchange margin debt hitting all-time records, extremes in sentiment—you know, bulls higher than, really, recorded ever before except for maybe one or two instances. And bears—that is, the people that are negative on the stock market—just registered recently at 14%. You know, in other words, only 14 out of 100 people think the market is going to go down.
So you know, three legs of the stool, so to speak, if you take a look at valuation, speculation, and sentiment, are amongst the most hostile as you would have seen in maybe just a few other times in the last hundred years or so. So you know, risk control is paramount here.
So in addition to what John was just talking about—and again, I will just reiterate—we are reducing equities now, probably below 20%, raising some cash. You know, take a look at your employer sponsored retirement plans, whether they are 401Ks or 403Bs. A lot of these plans have guaranteed investment accounts. Sometimes they are called "stable value funds" and these funds often pay 3%. Not all plans have them but if your plan has it, you should take a good look at it. We will offer the caveat that these plans are not FDIC insured. But you know, we think they are pretty safe and certainly a heck of a lot safer than a stock fund within a 401K.
If you do not have a stable value account, you take a look at either the money market option or the short-term bond fund options that are in there, preferably US Treasury short-term bond fund. You are not going to get a lot of return, probably less than 1% annual dividend. And maybe a little bit of appreciation in the next year or so if we get a little bit of a shakeup in the market. I think there is likely to be a little bit of a flight to quality and so the real short-term bonds should be safe.
Also, if you are more sophisticated or working with a more sophisticated money manager, you can think about hedging your account with options. Because really, there are different ways to do that. You can use put options on an index or on an individual stock, which is a lot like buying insurance on your house or even life insurance. If something bad happens, it basically pays off. It is a contract. And also, call option strategies are useful to mitigate some downside risk.
So there is probably too much to go into detail there but options contracts can be very important and it is something that we are using a lot right now and generally use a lot of as part of our strategy to hedge risk.
Chris Martenson: And so to make sure I understood correctly about bonds at this point in time, you are saying let’s not write off bonds altogether but keep it to the shorter, higher quality bonds. That is where you want to be at this point. And you mentioned treasuries. Where are you on corporate issues and, say, munis at this point in time?
John Llodra: Yeah, so Chris, yeah, I think it is important to talk about bonds because a lot of people have categorically written bonds off as an asset class. You know, it is almost universal truth right now that people expect interest rates to go higher and most folks understand, rightly so, that when interest rates go higher over time, it is generally not a good thing for bonds. But we do not think it is quite that simple. We think that some bonds do deserve a place in a properly diversified and protected portfolio. But understanding the basics of bonds is important to know likely what segments of the bond markets are likely to be relatively immune to some of those risks that we just talked about. So just as a simple general rule, longer-term bonds are more susceptible to interest rate spikes than shorter-term bonds. There is a measurement called "duration." It is closely related to the maturity of a bond. But basically, if you take a duration of a bond, it expresses the percentage change in the value of that bond for each percentage change in the interest rate, okay? And they work in opposite directions. So you know, a bond with a duration of ten would have a—for a 1% increase in interest rate—would suffer roughly around a 10% capital loss. That is the simple mechanics of how bonds work in relation to interest rates.
So with that in mind, if one believes—and I think it is a prudent belief—that interest rates over time will trend higher, perhaps substantially so, all else being equal, we want to be in shorter term bonds because the sensitivity to interest rates, all else being equal, is going to be less for the shorter term bonds.
So we particularly like the short end of the bond spectrum, maybe in the two to seven-year range with an emphasis again on things like high quality treasuries, you know, AAA rated—not AAA anymore, but US Treasuries—as a relatively safe place to be. Not as a long-term hold but for the right here and now where we are.
When you talk about the kinds of bonds, they are typically referred to as "spread product" over and above Treasuries as the benchmark. So when you talk about corporate bonds, they are usually priced in the form of some higher interest rate relative to a comparable maturity Treasury bond. So the spread there is the measure of how much risk people are associating with those corporate bonds relative to ultra-safe Treasuries. And you get further down the spectrum to, you know, junk bonds, which are corporate bonds issued by un-creditworthy companies, if you will. When you look at the spread between bonds, corporate bonds and junk bonds and things like that, we are at very, very razor thin spread levels. Which basically says investors have bid up the prices of those bonds relative to Treasuries to say that they do not perceive much risk in those bonds. Out of desperation, they have sought out higher yields to the point where they have almost ignored the real risk associated with these bonds relative to Treasuries.
Perfect example: Last year saw record issuance of what we call "cov-lite," below investment grade bonds. This only happens in a very speculative market where people are willing to put caution to the wind in search of higher yields and they are accepting very, very razor-thin spreads relative to Treasuries to get that higher yield, seemingly ignoring the real risks associated with those bonds.
So we are in favor of keeping it really simple, high quality Treasuries on the very short end. Not in a huge amount—you know, again, we probably prefer more cash than Treasuries right now. But you know, you can get some yield pickup by having some good shorter Treasuries and have a plan to, you know, rotate out of those when we see more attractive prices in either stocks or some of these more credit-sensitive type bonds like corporates. We are not even close to being fans of high-yield junk bonds right now but some day, they will be a good value again.
Chris Martenson: Someday, but not at these levels, certainly not with a five handle or a 5% yield on a CCC rate. That is nuts.
So in this environment then, where obviously everything from CCC rated junk bonds to equities are very, very highly priced—priced for perfection—then a general risk assessment checklist, we have got our cash positioning making sure that we have got some powder dry and maybe increasing that cash positioning as things get more elevated. Looking at bonds but of course, keeping that to the shorter, lower duration, high quality bonds—that is where you want to be to the extent you are in them. And then hedging risks for the remaining part of your portfolio that happens to be exposed to equities—either puts or covered calls, depending on what goes on. Is that the rough—let’s call that the big three for your checklist here?
Mike Preston: That is pretty much it, Chris, but do not forget to look at your retirement plans either at your current employer or your previous employer. Because a lot of people forget about them and there are significant assets in there. And a lot of times, those accounts are on autopilot. So you know, a lot of people we have seen recently have had done very well in the last couple years because they were mostly in stocks and that is a good thing, it has worked out. But really, you are going to want to look at those things and really pare way back your stock exposure in all accounts. But do not forget your retirement accounts.
John Llodra: Yeah, another category there, some folks own variable annuities, for example. They have been very popular products that folks have bought over the last bunch of years and that is another class. If folks own variable annuities, they often forget about it. They are oftentimes on autopilot. Many of them have very substantial stock market exposure and many folks are not aware—much like in the retirement accounts—you can oftentimes get access to a fixed interest account in those variable annuities that might pay upwards of 3%, as Mike alluded to.
So for someone who is concerned about risk, do not forget that there may be very safe ways to re-jigger those accounts and still get, you know, what one might consider a way above market yield by these guaranteed interest accounts.
Chris Martenson: Excellent advice there. Yeah, it is easy to forget about those 401Ks and also, how a variable annuity really works. People maybe think of the word “annuity” and think that has a defined rate but the "variable" is the important term in that. And the exposure of those variables to equity is, of course, means they can be variable in both directions. So important advice there.
So here we are at this juncture. What is your, like, major advice and how would you talk to me if I was a new client thinking of coming to you about where we are in this particular part of the market cycle?
John Llodra: Well, right now, Chris, we talked pretty matter-of-factly about some objective observations that we have and have had. That is our job. We spend our days trying to sort through our own emotions armed with our objective data, historical context, and all of that kind of stuff. But we do not want for a moment for our clients and certainly the listeners to this podcast -- for folks to come away with the sense that we underestimate the emotional difficulty of the times we are in. It is a very emotionally hard time to be a prudent investor. We do not for a moment want to downplay how excruciatingly hard it is in these times. It is very hard. It is hard for us. We work very hard to control our emotions through objective data. But we sympathize, we understand the emotional torment that folks are going through and it is a function of the kind of the phase of the market we are in, you know. And that is where having a well thought out, disciplined plan makes all the more sense. Because, you know, you listen to verbal cues, a lot of people might say, “The market is going up.” And just that one verbal statement tells a lot. You know, it may have gone up, it does not mean it is going to continue to go up. But that still comes out that way in a lot of people’s minds and even out their lips.
You know, we are human, too. We understand the pain and the agony of having to make difficult calls at a time where it seems like you cannot lose. But you know, it is very important to think about it rationally, not emotionally.
Mike Preston: And I think I would add, Chris, you know, after acknowledging, of course, how difficult this is for everyone involved, I mean, everyone is getting psychologically worn out, really, it is simple basics, you know. Just do not lose context of the longer-term market cycle. We think we are still in a secular bear market that started in the year 2000—fourteen years into it, you know. We still, in a way, are dealing with the issues of the 80s and the 90s and just kind of—we are in the hangover, the aftereffect of that time. And valuations again, though, are off the chart, which makes it even more precarious.
So do not get tempted to think we are at the dawn of a new era of growth here. It is not very likely, not based on the data we look at. It is much more likely that we are still in a secular bear market versus at the beginning of a secular bull market.
And so secondly, stay patient. The hardest thing to do. It may help to work with somebody else in this case if you happen to be prone to being impatient. But just being patient and sitting with a high amount of cash and just waiting what we acknowledge is a very long time, it seems, maybe even a year or two is certainly how long we have been patient here in the last cycle. It can be very hard but very, very important.
And so the temptation to do something is always there but it is very important to sit on your hands and rely on the data that we are seeing, which is extreme—very extreme.
John Llodra: And it is also, just to add, it is also very important to bring it back to one’s own life. I mean, we sometimes get caught up in keeping up with our neighbors or the stock indexes in the newspaper or online and we forget about what we are doing this stuff for, right? I mean, you know, one should be careful not to, in pursuit of that last percentage point of gain, not unwittingly put at risk a potential lifetime of security during retirement by, you know, exposing themselves to huge potential for loss.
So bringing it back to where one’s own life is financially, how on track are you to what you need to achieve? And these are all things we can, and often do, sit down with clients about. You know, we bring it back to where are they in their own financial life? Why shoot for the moon when risks are high if you have already got a good situation? And that is really critically important to bring it back to your own life and put it in the context of really what you need to get what you want to have done.
Chris Martenson: Well, here we are, five years into living in this funhouse and the mirrors are—I do not know if I am fat or thin anymore, it has been too long. So I, too, sympathize with people who are—and I talk to people all the time who are in this position where they have cash, they have some funds to invest, they pull back a little bit, and frankly, there is nothing that looks appealing to them at this particular moment in time.
But you know, I think history does rhyme a lot and one of the pieces of advice from Jesse Livermore way back in the '20s and '30s, a famous investor, was that sometimes the hardest thing to do is to just do nothing. His advice, I believe, was to just sit on your hands. So it sounds like this is a time to be patient, in your estimation, that when things are this distorted, we know the price of everything but maybe the value of nothing. And we are going to have an adjustment period at some point that really—it is a measure of prudence and responsible cycle investing to know where you are in the cycle. And sometimes that requires being patient and doing nothing.
Mike Preston: It is unfortunate but true, Chris. That is exactly right. And that is where we are and we will remain so in the way that we manage accounts and we would urge your listeners to remain patient and calm and wait for better opportunities. As boring as that is, that is the truth.
Chris Martenson: Absolutely. Well, Mike, John, thank you both so much for your time today and I look forward to our future discussions on this. I really think that the way you are managing portfolios in the environment makes a lot of sense. And I know it does resonate for people, even if it is difficult given where the markets have been going. But prudence is really the mark of any successful investing strategy, I believe.
Mike Preston: We certainly agree with that.
John Llodra: Yeah. As always, thank you Chris for having us on with you and your listeners. Hopefully we'll meet again soon on this same podcast.
Chris Martenson: We certainly will. Thanks again guys.
Mike Preston: Thanks Chris.
John Llodra: Bye now.